SINGAPORE (Nov 23): Shares of Midas Holdings continued to tumble on Thursday, falling 11.8% to 15.7 cents as at 4.21pm. Since closing at 21.5 cents on Nov 13, the stock has shed over a quarter of its market value.

The plunge comes after reports last week that another city government in China has jammed the brakes on railway projects worth billions of dollars amid tightened scrutiny from Beijing.

China is the primary market for Midas, which manufactures aluminium alloy extrusion products for the rail transportation sector.

In the 3Q ended September, Midas saw its earnings grow 6.6% to RMB 24.1 million ($4.9 million) on the back of a 11.5% increase in revenue to RMB 458.5 million as a result of higher export sales.

In a statement accompanying its quarterly results announcement after market close on Nov 13, the group said it expects the railway sector in China to continue its strong growth in the mid- to long-term, underpinned by the central government’s investments into the development of the country’s rail network.

See: Midas posts 6.6% increase in 3Q earnings to $4.9 mil

That optimism is now called into question, after an alleged clampdown by Beijing on local governments’ infrastructure spending.

According to reports last week by Chinese news outlet Caixin, at least two cities in northern China’s Inner Mongolia autonomous region – capital Hohhot and neighbouring Baotou – have halted plans for railway projects.

Quoting sources close to the matter, Caixin claims the Chinese government in August pulled the plug on a RMB 30 billion subway construction project in Baotou due to concerns over the draining of city coffers.

In the capital city Hohhot, the local government is said to have cancelled subway Lines 3 and 4, which involved a total investment of RMB 27 billion.

Meanwhile, several other city governments from Xianyang in Shaanxi province and Wuhan in Hubei province have also been reported to face difficulties in winning approval from the central government for their railway construction plans.